NHS: Finance

Andrew George
To ask the Secretary of State for Health whether any arrangements are in place to assist trusts with budget deficits to bring forward capital investment proposals.

Mr. Bradshaw
[holding answer 20 March 2009]: There were 17 NHS trusts designated financially challenged in 2006-07 (financially challenged trusts (FCTs)). Long-term financial recovery plans were drawn up for these NHS trusts with the aim of returning them to financial balance while maintaining and improving services to patients. 10 of these trusts have agreed a realistic profile for surpluses going forward and repayment of their historic debt within five years and were no longer therefore designated as FCTs at the beginning of the 2008-09 financial year. One of these trusts was Royal Cornwall hospitals NHS trust.

Capital investment schemes can form part of the recovery plan at FCTs as they can deliver cost efficiency savings at the same time as improvements in patient care. In exceptional circumstances, where a trust urgently requires a level of investment that it cannot afford from its depreciation or from affordable borrowing from the Department, it can receive an exceptional allocation of capital from the Department (referred to as exceptional Public Dividend Capital (PDC)).

At Royal Cornwall hospitals NHS the Department has recently agreed to fund two capital schemes from exceptional Public Dividend Capital: new operating theatres at St. Michael's hospital (total £5.8 million); and £3.8 million to create a ‘central hub' for sexual health services on the Royal Cornwall hospital site.

Andrew George
To ask the Secretary of State for Health what capital project funding is available to (a) primary care and (b) acute trusts for (i) substantial and (ii) large capital investment projects.

Mr. Bradshaw
[holding answer 20 March 2009]: Both public capital and private finance through the private finance initiative (PFI) and NHS Local Improvement Finance Trust (LIFT) (for acute trusts and the primary care estate respectively) is available for both small and large scale capital investment projects.

Information on the amounts of public capital resources so far allocated to strategic health authorities (SHAs), NHS trusts and primary care trusts in 2008-09 has been placed in the Library.

The allocations data provided show the total capital resources allocated up to the end of Quarter 3 (December 2008). Allocations include capital funding for locally prioritised capital expenditure and programme capital for centrally announced initiatives and reflect adjustments for capital grants to third parties.

Some organisations are showing a negative capital allocation. Negative allocations can arise where there are planned asset disposals and the selling organisation does not plan to reinvest the total value of the disposal in capital assets in the selling organisation’s books in the year of disposal.

From resources of £5.6 billion and £4.8 billion of public capital for the NHS announced in the pre-Budget report (November 2008) for 2009-10 and 2010-11 respectively, allocations for these years are currently being set as part of NHS trusts’ and PCTs’ financial plans.

Private Finance in the form of senior debt and shareholder capital (equity) under the PFI and NHS LIFT initiatives is raised by private sector project companies which win contracts for schemes put out to tender by the procuring authority (i.e. an NHS Trust or PCT).